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10/18/2019

John McGinnis on the Contracts Clause
Michael Ramsey

At Law & Liberty, John O. McGinnis: Reviving the Contract Clause: An Acid Test for Originalism.  From the introduction:

Whether the Contract Clause will be restored as a protection for private property rights provides an important benchmark for the success of originalism. The Clause was the most litigated provision of the Federal Constitution in the 19th century, but today it has become a shadow of its former self because the Court has abandoned its original meaning. It is difficult to overrule some Supreme Court decisions, even when egregiously wrong, because people have come to rely on them or because essential institutions have grown up around them. But the Contract Clause by its term applies only to new laws that undermine established obligations and does not implicate substantial reliance or other institutional interests. No sound theory of stare decisis should protect the decisions that have distorted its meaning.

And on a pending case: 

Only the Supreme Court can overrule its prior Contracts Clause jurisprudence. But lower courts should read non-originalist precedents where they are ambiguous to preserve as much of the original meaning as possible. That was the approach of Judge Steve Colloton joined by Judge David Stras in the recent case of Association of Equipment Manufactures v. Burgum. North Dakota had prohibited manufacturers of farm equipment from requiring delay to maintain exclusive facilities, “unreasonably” refusing to approve the relocation of dealerships, or imposing “unreasonable” performance standards on dealers. The provisions were to apply retrospectively, substituting for contractual terms agreed upon by farm equipment manufacturers and their dealers.

The majority opinion held that that the North Dakota statute worked an impairment, suggesting that even if North Dakota has previously regulated some aspects of the contractual relationships, the statute imposed additional or expanded regulations. Most importantly, it rejected the argument that these provisions were in the public interest over a dissent that suggested that state action should be presumed in the public interest, and that while the law helped farm equipment dealers at the expense of manufacturers, it would also redound to the benefit of farming communities.

...

It is also clear that the majority recognizes the original meaning of the Contract Clause, because it spends substantial space discussing it before turning to Supreme Court precedent. As in other cases by lower court originalist judges, the original meaning is not forgotten but is used to favor the more originalist readings of Supreme Court precedents when, as it often the case, the differences among them and indeed their ambiguity considered even individually would otherwise leave discretion with lower court justices.

In conclusion:

The [Borgum] case would be a good vehicle for the Court to reexamine its Contract Clause jurisprudence. ... [It] presents an undoubted impairment that would permit the Court to restore the Clause to its important place in the Constitutional firmament as an expression of the American commitment to private ordering and the rule of law.

Agreed.